Arbitrage is a trading strategy that involves taking advantage of price differences for the same asset in different markets. In the case of Monero (XMR), its delisting from certain exchanges due to privacy concerns has created an interesting opportunity for arbitrage in parallel markets.
One platform that has seen significant trading activity for Monero is Bisq, a peer-to-peer, no-KYC platform. On Bisq, Monero is already the third most traded currency against Bitcoin (BTC), and it slightly loses in volume for the U.S. dollar (USD) and the euro (EUR).
Currently, the “Street Price” index on monero.boats calculates a price of $156.75 for XMR. This index reflects the organic, cash-like trading of Monero on the street. The calculation is based on the last exchange rate of Monero against Bitcoin on Bisq.
On major exchanges, however, Monero is trading at an average of $143.09 according to the TradingView price index. This presents a 9.5% premium for Monero traded on the streets compared to the trading price on exchanges. This discrepancy in prices creates an arbitrage opportunity for traders.
By buying Monero on mainstream exchanges at the lower price and selling it on platforms like Bisq at the higher price, traders can profit from the price difference. However, traders need to be aware of the risks associated with arbitrage, such as quickly changing prices and transaction costs that can eat into potential gains.
It is important to note that low-volume markets like Bisq often follow the prices of high-volume markets during arbitrage. Additionally, traders must also be cautious of dealing in unregulated markets and consider the limited liquidity in street markets, which may impact the execution of large trades.
Overall, the significant premium for Monero traded on the streets compared to exchanges makes this arbitrage opportunity attractive for traders willing to navigate the associated challenges. However, it is essential to remember that investing always carries risks, and this information should not be considered investment advice.